Monsanto Demands Brazilian Soy Licensing

ALAN CLENDENNING

Published 8:00 pm, Wednesday, June 11, 2003

AP Business Writer

In an attempt to claim lost profits from widespread illicit use of genetically modified soybean seeds in Brazil, U.S. agricultural giant Monsanto Co. is demanding that exporters sign licensing agreements and pay royalties.

Soybean growers in Brazil, the world's second largest soybean producer after the U.S., are prevented by Brazilian law from using any type of genetically modified seeds.

But they do anyway with Monsanto's Roundup Ready seeds smuggled into Brazil from neighboring countries and by growing more on their own land. The Brazilian government rarely enforces the law.

So Monsanto sent a letter this week to about 250 exporters that buy Brazilian soybeans and 150 importers, saying the company will start monitoring shipments starting in July.

"We sell the technology that goes within the seeds," Monsanto spokesman Lucio Mocsanyi said Thursday. "The problem in Brazil is the technology was not approved and these seeds were pirated and multiplied illegally."

Monsanto's move in Brazil come as the struggling St. Louis-based company shifts its business focus from manufacturing herbicides to developing and selling genetically engineered seeds around the world.

It has complained bitterly for years about Brazilian farmers using Monsanto's technology without paying for it. Monsanto has also been lobbying the Brazilian government to legalize genetically engineered crops.

Shipments of soybeans grown from the seeds that reach foreign ports could be impounded or sent back to Brazil. Monsanto, which has a patent for the seeds in Brazil, could also take legal action against exporters and importers, Mocsanyi said. Most of the importers are based in Europe and Japan.

Monsanto wants the exporters to pay royalty fees on soybeans harvested using the seeds.

Brazil is expected to export 20 million metric tons of soybeans and 14.5 million tons of soymeal from its 2002-2003 harvest of nearly 51 million tons. Experts estimate about 17 percent of the crop comes from Monsanto seeds smuggled from Argentina and reproduced by growers.

Monsanto is negotiating with the exporters, and an agreement could be reached within a week, Mocsanyi said. If the company seals a deal, it would not start charging royalties until the 2003-2004 harvest.

Company critics, though, are skeptical of Monsanto's chances of collecting widely in Brazil. They don't see how the company can police all the soy exporters.

"It's a bluff," said Charles Margulis of Greenpeace. "They tried the carrot and now they're trying the stick."

The company expects exporters would pass on the additional cost to growers, but Mocsanyi said Monsanto isn't looking to recover all the profits producers reap by using the seeds. The growers, he noted, buy other Monsanto seeds that are legal in Brazil.

"It's in our interest for them to have more revenue, we just want a portion of it," he said.

In the U.S. and elsewhere, Monsanto does not charge royalties to soybean exporters because the seeds are legal. It licenses seed sellers, who pass on the cost to farmers buying them.

The company decided to the take step in Brazil because the country's soybean business has grown exponentially in recent years.

Brazil's government has been trying to resolve the controversy over the genetically modified seeds, but no solution has been reached yet.

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Editors: AP Biotechnology Writer Paul Elias contributed to this story from San Francisco.